COVID-19: VAT round-up

Last updated 2 December 2020

Temporary VAT reduction for hospitality, holiday accommodation and attractions

On 8 July the Chancellor announced that certain supplies of hospitality, holiday accommodation and admission to attractions would be subject to a temporary 5% reduced rate of VAT. This reduction in the VAT rate takes effect for supplies made between 15 July 2020 and 31 March 2021.

More information, inlcuding HMRC's response to queries rasied by the ATT regarding the operation of this reduction, can be found in our temporary VAT reduction guidance note.

MTD for VAT – digital links soft landing period

Businesses within the scope of the Making Tax Digital (MTD) for VAT rules are required to have digital links in place for any transfer or exchange of data between software programs, products or applications used.  This requirement was subject to a one-year soft landing, which was due to expire in April 2020. 

However, on 30 March 2020 HMRC announced that the soft landing period for digital links will be extended by one year for all businesses within MTD for VAT.  This means that businesses now have until their first VAT return period starting on or after 1 April 2021 to put digital links in place.

VAT payment deferral

On 20 March the Government announced that VAT payments could be deferred for a three-month period.

More information can be found in our VAT payment deferral guidance note, which continues to be updated as we receive further information.

Error Correction

HMRC have added the following information to their error correction guidance:

“In order to support individuals and businesses through the short-term impacts of Covid-19, we are introducing new ways of working. To ensure that VAT customers can continue to submit Error Correction Notices we will temporarily accept these by email.  Please send your completed form VAT652 to [email protected].  We will issue any further updates in due course.”

We have also been asked to highlight that:

The email inbox should only be used to submit VAT Error Correction Notices (VAT652) and is not for general use. Please do not use it for any other use as your correspondence will not be actioned.

  • HMRC accept that, by sending them your VAT 652 via email, you understand and accept the risks of using email – interception, integrity, alteration and non-repudiation.
  • HMRC will not respond via email from this mailbox. Responses will be by post.

HMRC are continuing to look at new ways of working, including wider use of email, while ensuring the security of customer data.